The U.S. economy is stumbling along with persistent job losses and dire warnings of a double-dip recession, but the big story for the 2010 class of the Fortune 500 is the stunning 335% increase in earnings— a jump of $301 billion over the previous year. Perhaps more surprising is that this massive earnings increase occurred despite a sharp fall in revenues. Sales by Fortune 500 companies fell 8.7% to $9.8 trillion, the biggest decline since the early 1980s1. But while corporate cost-cutting dictated job losses at many Fortune 500 firms, for the most part, minority general counsel managed to avoid the pain.

As the gross domestic product shrank by around 6% in 2008 and early 2009, and sales decreased alarmingly, companies responded by furiously slashing costs. Since about two-thirds of company costs come from labor, that meant job losses. Fortune 500 companies cut 821,000 jobs in 2009, a 3.2% reduction in payroll, which is the biggest reduction of its kind in the history of the list. With only modest increases in wages for 2009, the labor costs for American companies fell by 4.6%, the biggest drop in postwar history. Companies maintained this iron grip on costs to offset overall revenue shortfalls as economic growth finally returned late last year, leading to the massive increase in profits. Increased sales and falling unit labor costs resulted in healthy bottom lines in the Fortune 500.2

With consumers searching for bargains and shunning discretionary purchases, electronics retailers and auto-parts suppliers were punished, but budget-conscious Walmart was rewarded for its low prices with a 7% surge in earnings to $14.3 billion. Overall, 2009 was a good year for Fortune 500 companies selling products consumers considered essential, but a bad year for those selling items customers merely wanted to have.3

Forty-three companies on the 2010 Fortune 500 list employed minorities as general counsel (8.6 percent), an increase of two over the previous year and up six from 2008. Of those 45 minority general counsel, 25 are African Americans, 11 are Asian Americans and seven are Hispanic Americans. Overall, the number of African American general counsel in the Fortune 500 is down one from 2009, but Hispanics have increased their number by two.

Increasingly, women of color are also taking the lead of Fortune 500 legal departments. In 2008 and 2009 eight women of color held the position of general counsel, but that number increased to 11 on the 2010 list. Of those 12 women, seven are African Americans, three are Hispanic Americans, and one is Asian American. Compared to 2009, African American women increased their number by two and Hispanic American women increased their number by one.

At the Fortune 250 level, 28 companies are represented by a minority general counsel, an increase of one over 2009. Fifteen of these are African Americans, six are Hispanic American, and another six are Asian American.

Of the 2010 Fortune 500 companies with chief legal officers of color, 13 had revenues of at least $20 billion, a drop of 3 from 2009. Fourteen companies on the list had revenues between $10 billion and $20 billion, thirteen companies had revenues between $5 billion and $10 billion, and five companies had revenues under $5 billion. Of the 45 Fortune 500 companies with minority general counsel, only six were not profitable in 2010.

Some of the best performing companies on the 2010 Fortune 500 list are represented by minority general counsel. For example, five of the most profitable companies in America were Bristol-Myers Squibb (GC Sandra Leung), Google (GC David Drummond), Liberty Media (GC Charles Tanabe), PepsiCo (GC Larry Thompson), and McDonald’s (GC Gloria Santona).

Among the 20 fastest-growing companies on the Fortune 500, persons of color run the legal departments of four, including William Harker at Sears Holdings, John Chou at Amerisource Bergen, Don Liu at Xerox, and Douglas Williams at Limited Brands. Bristol-Myers Squibb and Google also made the list of fastest growing companies on the 2010 Fortune 500.

Liberty Media, with GC Charles Tanabe, offered the most return on revenues of any company in the 2010 Fortune 500 list and Bristol-Myers Squibb (GC Sandra Leung) offered the second highest return on revenue. Google (GC David Drummond) made the top 10 list in return on revenue and McDonald’s (GC Gloria Santona), Spectra Energy (GC Reginald Hedgebeth), and Western Union (GC Martin J. Wong) were also high on that list. For total return to shareholders, no company in the Fortune 500 performed better in 2009 than Avis Budget Group, where Michael K. Tucker is general counsel. ArvinMeritor (GC Vernon Baker) and Starbucks (GC Paula Boggs) were also exceptional performers.

Fortune 500 general counsel of color are a geographically diverse group. California is home to 10 minority general counsel-led companies, tops on the list and an increase of one from 2009. Moving into second place this year is Illinois, home to seven companies on the list. New York falls from second to third with six companies employing minority general counsel on the Fortune 500. States such as Texas, Pennsylvania, Ohio, Florida, and Colorado were also represented by multiple companies with minority chief legal officers.

Fortune 500 Departures and Arrivals
There were some losses on this year’s list, with some Fortune 500 companies replacing a general counsel of color with a white GC. Chevron [3 overall] replaced African American Charles James with Hewitt Pate, and Proctor & Gamble [22] replaced African American Steven Jemison with Deborah Platt Majoras. In addition, MetLife [51] replaced African American James Lipscomb with Nicholas D. Latrenta, and Wesco International [448] replaced African American male Leslie J. Parrette Jr. with Diane Lazzaris.

Newcomers to the Fortune 500 list of minority chief legal officers include African Americans Michael K. Tucker of Avis Budget Group [409 overall], who replaced a white female in May 2010, and Keith Williamson, who runs the legal department of Centene, which moved from 609 last year to 486 on this year’s list.

Fortune 501-1000
The number of chief legal officers of color in the Fortune 10004 bounced back after a decline in 2009. The 2010 Fortune 1000 includes 27 companies with minority general counsel, an increase of three over the previous year. Of the 26, 11 are African Americans, eight are Asian Americans, six are Hispanic Americans and one is a Pacific Islander, who is grouped as an Asian American. That represents an increase of one each for African Americans, Asians and Hispanic Americans. Six of the 27 general counsel of color are women, including four African Americans, one Asian American and one Hispanic American.

With five, California is once again home to the highest number of general counsels of color at Fortune 1000 companies. New Jersey is home to four companies on the list and the rest are spread fairly evenly around the country, with New York, Florida, Ohio, Pennsylvania, and Texas among the states with multiple companies employing minority general counsel. The list also includes a company from Puerto Rico and one from Washington, D.C.

Fortune 1000 Newcomers
Newcomers to the Fortune 1000 include Paul Chung of Targa Resources (505 overall), Ram Wertheim of MBIA (655), Kellye Walker of American Water Works (734), Roberto Garcia of Triple-S Management (838), Samrat Khichi of Catalent Pharma Solutions (948), Alberto de Cardenas of Mas Tec (968), and A.B. Cruz of Scripps Networks Interactive (992). African American Gregory Nixon of DynCorp International (627) is another new- comer to the Fortune 1000, having replaced a white male as general counsel of his company.

Continued Growth
The stringent cost-cutting of 2010 imposed hardships on many workers, but talented minority lawyers continued to expand their presence at the reins of many of the nation’s most important and profitable corporate legal departments. Their contributions are an important part of the success of their companies in 2009 and beyond. That future should be bright indeed, for though only 9% of all Fortune 500 companies are represented by minority general counsel (up from 8.6% the year before), 20% of the fastest-growing companies have persons of color running their legal department. Some of the brightest stars of the 2010 Fortune 500 were Liberty Media, Bristol-Myers Squibb, and Google, each with a minority general counsel. And while the small number of minority women in last year’s list was correctly described as a “disappointment,” the 33% increase in one year (from 8 to 12) is encouraging. If today’s success is indicative of progress tomorrow, the future should be bright for minority general counsel in the Fortune 500. DB

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